Gaurav Ratnaparkhi
The Nifty posted its third consecutive weekly positive close last week. The daily chart shows that price action over these three weeks is characteristic of a pullback. This means the move has multiple overlapping structures and is unlikely to develop into a larger rally. The daily Bollinger Bands have flattened over the period, which caps the upside at the upper band.
On a higher timeframe - monthly chart, the Nifty has formed a Doji pattern for May. A Doji is a sign of exhaustion in the market. Thus, we are likely to witness a correction unless the high of the Doji pattern (10,929) gets taken out.
In terms of Fibonacci retracements, the pullback over the last few sessions has retraced 78.6 percent of the fall from 10,929 to 10,417 levels. Thus, the risk-reward ratio at this level is quite attractive to create short positions with a reversal above 10,929 levels. On the downside, 10,417-10,300 will be targets to watch out for.
Stock ideas for the short term:
Rating: Sell | Stop Loss: Rs 300 | Target: Rs 260
The stock formed a channelized pullback & broke the lower channel line towards the end of the last month. It has retested the channel breakout line & is poised for the next move down. The short term momentum indicators are in line with the bearish outlook.
Rating: Sell | Stop Loss: Rs 148 | Target: Rs 132
The stock formed an Ending Diagonal pattern to end a pullback & broke out on the downside. Thereon it has resumed the larger downtrend. In terms of the wave structure, an Impulse is expected to form on the downside
Rating: Buy | Stop Loss: Rs 982 | Target 1120
The stock, over last few weeks, witnessed a short term correction from the high of 1101. The correction found support near the junction of 40 day exponential moving average & the daily lower Bollinger Band. Thereon the stock seems to have resumed the larger uptrend. To mark end of the decline, the stock has formed a bullish outside bar on the weekly chart.
Disclaimer: The author is a senior technical analyst at Sharekhan. The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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